Monday, July 23, 2012

21 Trillion

That's the number of dollars the super rich have hidden in off shore tax havens, according to a recent report written by James Henry for the Tax Justice Network:

Mr Henry said his $21tn is actually a conservative figure and the true scale could be $32tn. A trillion is 1,000 billion.

Mr Henry used data from the Bank of International Settlements, International Monetary Fund, World Bank, and national governments.

His study deals only with financial wealth deposited in bank and investment accounts, and not other assets such as property and yachts.

The report has generated some skepticism, given its sponsors. However, given what we know of the one percent, that number should not be surprising. More importantly:

The report highlights the impact on the balance sheets of 139 developing countries of money held in tax havens that is put beyond the reach of local tax authorities.

Mr Henry estimates that since the 1970s, the richest citizens of these 139 countries had amassed $7.3tn to $9.3tn of "unrecorded offshore wealth" by 2010.

Private wealth held offshore represents "a huge black hole in the world economy," Mr Henry said.

For more than thirty years, Conservatives have peddled the nostrum that if you give the wealthy a  break -- a tax break -- they will use that extra money to create jobs. It would appear that they have squirrelled that extra money away in offshore accounts.

Milton Friedman sold world leaders the idea that tax breaks encouraged altruism among the wealthy. He also claimed that tax breaks encouraged "rational" behaviour. The truth was quite the opposite. And thousands of years of human history have simply confirmed a simple truth. The wealthy do not act out of altruism. Giving them a break simply encourages more greed.

Is it any wonder that our economy has collapsed and our eco-system is on the verge of collapse?


Lorne said...

What really makes me wonder, Owen, is why so many people still cling to the nostrums you mention in your post. Is it ignorance, lazy thinking, the pervasiveness of right-wing propaganda, or a secret belief that they too will someday become one of the elite?

Anonymous said...

"The wealthy do not act out of altruism. Giving them a break simply encourages more greed."

Ya eh?

Owen Gray said...

I just got off the phone with another retired teacher, Lorne, who I worked with for years. He's not a Harper supporter.

But someone who my friend went to university with -- and his wife -- visited over the weekend. The man was a student of history. And he really believed the Harper line.

My friend described his friend as someone who appeared to have undergone a religious experience.

What do you do when politics becomes a religion?

Owen Gray said...

It's all about making the world safe for oligarchy, Mogs.

Anonymous said...

" He also claimed that tax breaks encouraged 'rational' behaviour. The truth was quite the opposite. "

I disagree. The super rich probably are acting rationally. Rational and humane behaviour are different things. We also need to distinguish between what is individually rational, and what is rational for everyone as a whole.

For example, if someone yells "fire" in a crowded theatre (better yet, if there is a fire) and there are limited exits, and not everyone can get out in time, it makes perfect sense for an individual to push and shove and trample. But since everyone as individuals does that, they all end up worse off. I think that the modern right, and the wealthy elite, has created (or been in the process of creating) a system in which we are all worse off. They won't notice though. They just notice how much better off they are compared to the people at the bottom. And if feels good.

Owen Gray said...

The super rich suffer from a common human malady, Anon. They believe that what they do should serve as a template for the rest of humanity.

Mitt Romney believes that, if Americans imitate his behaviour, they will all get rich.

Friedman called the Romney model "rational." He assumed -- with Alan Greenspan -- that it was rational for markets to be self regulating.

Keynes would have said that markets go off the rails precisely because they are not rational.